Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) announced this week that they reached agreement on a short-term package that would stabilize premiums in Affordable Care Act (ACA) Marketplaces for the next two years.
Uncertainty over whether the Trump Administration would continue to fully-fund the ACA’s cost-sharing reductions (ACA) had already led Marketplace insurers to dramatically increase premiums for 2018, including average rate hikes of 45-50 percent in Georgia and Florida, and 25 percent in California. The CSRs are written into law, meaning eligible consumers will continue receive them from insurers unless they are repealed. (These subsidies can limit their out-of-pocket share to only six percent of coverage costs). However, President Trump’s decision this week to immediately stop covering CSR costs for insurers only days before the November 1st start of open enrollment is likely to further spike premiums or cause insurers to exit the Marketplaces altogether.
In an effort to mitigate these spikes and departures, Senator Alexander, who chairs the Senate Health, Labor, Education, and Pensions (HELP) Committee, and ranking member Murray had been working since early September on a compromise plan that would extend CSRs through 2019 in exchange for giving states greater flexibility to seek federal waivers allowing them to opt-out of key ACA provisions (apart from those protecting consumers with pre-existing conditions). Their draft legislation would greatly streamline the process by which states can get these State Innovation Waivers under Section 1332 of the ACA, cutting the wait time from 180 to 90 days and voiding the need for states to first pass authorizing legislation. In addition, states could get fast-track approvals for waiver requests modeled on another state’s approved waiver and the lifetime of waivers would be extended to six years.
However, the most critical change for Republicans may be relaxing the “guardrails” put in place by the ACA, that prevents states from receiving Section 1332 waivers unless their alternative reforms are budget neutral and provide comparable coverage that is “as affordable as” the ACA. The latter would be changed to requiring only “comparative affordability.”
The package surprisingly includes funding for state reinsurance programs, which had initially been ruled out by Chairman Alexander. These payments would compensate insurers for extraordinary claims, similar to the temporary ACA reinsurance program whose 2016 expiration led to premium spikes last year. The Trump Administration has already approved Section 1332 waivers allowing Alaska and Minnesota to create reinsurance programs with federal funding. However, the Alexander-Murray bill would only allow this provision to go into effect if cost estimates from the Congressional Budget Office (CBO) show their entire bill would have sufficient savings available for reinsurance funding.
Other measures included in an effort to garner conservative support include the creation of a “copper” tier plan that would essentially offer catastrophic-only coverage at a lower cost than “bronze” plans and apply the maximum deductible allowed by the ACA. It would be similar to the catastrophic-only option now offered only to those under age 30, but the age limitation would be removed.
In addition, the legislation would force HHS to finally issue regulations implementing provisions of the ACA that would allow insurers to sell coverage across state lines while complying only with the regulations of their home state. Such a provision has long been sought by conservatives and was part of the President’s recent executive order allowing for the return of limited benefit plans that do not include ACA consumer protections.
In an effort to secure full backing from Democrats, the measure would restore $106 million of the funding for Marketplace advertising and outreach that was cut by the Trump Administration for 2018.
The Alexander-Murray bill quickly drew enough bipartisan support that it would have more than the 60 votes needed to break a filibuster and advance to a floor vote in the Senate. However, passage in the House is far less certain, where roughly 40 members of the ultra-conservative House Freedom Caucus remain staunchly opposed to measures that “fix” instead of repeal the ACA. As a result, both Senator Ron Johnson (R-WI) and President Trump have called for the Senate bill to be amended to include provisions that would “rollback” key parts of the ACA, such as standards for essential health benefits and the individual and employer mandates. However, such a “rollback” would likely siphon away the Democratic support needed to assure House passage.
As a result, many analysts predict that the best chances for the Alexander-Murray compromise to be enacted may be as part of larger legislation that Congress must pass by the end of year, such as the federal budget bill for fiscal year 2018. However, if the bill passes after the start of the November 1st open enrollment period it is likely not to impact premiums for 2018.